Toronto’s 2018 Budget and Continuing Transit Austerity

In a report to the City of Toronto’s Budget Committee meeting for May 11, 2017, City Manager Peter Wallace makes two recommendations that will have a major effect on transit planning and operations in Toronto:

  • All spending for the 2018 Operating Budget would be frozen at 2017 levels. For the TTC, this would mean flat-lining the operating subsidy at its current level ($560.8 million for the “conventional” system, and $142.7 million for Wheel-Trans).
  • No new projects would be approved within the Ten Year Capital Budget and Plan until 2027 when there is borrowing headroom available to the City to fund additional works.

If a project is on the favoured list that is tagged for federal infrastructure subsidy, then finding a way to pay for the City’s share would be a priority in budgeting. However, it is not yet clear just which items in the TTC’s long shopping list will attain this status. Those that are excluded have only a faint hope of going forward.

A related problem here is that Toronto does not yet know how much, exactly, it will receive in Federal infrastructure grants, and it is quite likely that the money available will not stretch far enough to cover the entire list. Moreover, Queen’s Park is an uncertain partner because (a) the province feels it is already showering Toronto with money for projects now underway, and (b) the current government is unlikely to survive the 2018 election, and the policies of a successor regime could be hostile to large-scale transit spending commitments for Toronto.

Although there is much focus on Capital projects, the real challenge in the short term will be for the Operating budget. In the City’s report, the “opening pressures” for the TTC budget are substantial:

  • In 2017, $18 million was used from the TTC Stabilization Reserve fund to offset the budget shortfall and some new services. This was one-time money that must be replaced in 2018 and beyond. The reserve fund is now empty and cannot be used as a source to “fix” 2018 problems.
  • TTC ridership is forecast to come in below the budgeted level for 2017, and on a budget-to-budget basis, this represents a loss of $10 million in revenue. When the TTC Board passed its 2017 budget, it also decided that there would be no 2018 fare increase. Quite bluntly, that was a political stunt that simply cannot be implemented without new revenue or cuts to the operating budget. Fare revenue in 2017 is about $1.1 billion, and so each 1% increase would generate about $11 million, less whatever is lost to elasticity (riders lost by higher pricing).
  • The base operating costs of the TTC are forecast to rise by $102 million, not including the operating effects of Capital projects (see below). This covers wage and material cost increases, as well as the cost of any new service (none is currently planned thanks to the ridership situation).
  • The opening of the TYSSE to Vaughan will add $26 million to the TTC’s costs. Most of the riders projected for this line already pay a TTC fare, and so the marginal revenue will be much less than the operating cost. Riders transferring from York Region services to the subway for a journey to York University will not pay an extra TTC fare (this will be implemented via a Presto tap-out).
  • Other increases arising from past decisions (i.e. the full year effects of changes made in the 2017 budget year) add $6 million.
  • With more riders using Presto, fees to that provider will rise by $38 million. In the City Manager’s report, this is offset by a saving of $45 through the elimination of station collectors (about which more below).
  • Elimination of legacy fare gates and other old equipment will reduce costs by $5 million.

In summary:

Lost Revenue
  Stabilization Reserve          $  18 million
  Ridership Shortfall               10
  Subtotal                       $  28 million

Additional Costs
  Maintain Existing Service      $ 102 million
  Open TYSSE                        26
  Eliminate Station Collectors    - 45
  Presto Fees                       38
  Fare gate & other savings        - 5
  Other Increases                    6
  Subtotal                       $ 122 million

Total                            $ 150 million

The savings from Station Collectors arise because, from the City’s point of view, the TTC “Station Transformation Program” constitutes a new “service”, not a continuation of an existing practice. This includes conversion of the Collectors (or an equivalent headcount) into roving Customer Service agents. Indeed, there is reason to believe that the cost of this group of employees might have been included as a saving in the cost justification for Presto (or any other fare card).

I asked the TTC for the breakdown of savings and costs of the Presto transition, and received the following non-answer from Brad Ross:

The short answer from the TTC is that we continue to assess the timing of all of this – moving collectors out of the booth and transitioning to customer service agents, the costs associated continued fare collection and distribution, and the costs we will bear with being 100% Presto-enabled.

The 2018 budget process will flesh all of that out, but we’re not there yet. [Email of May 9, 2017]

That’s a rather odd state of affairs considering that the TTC based its criterion for Presto fees on what they expected to save in fare collection costs. Like so much about Presto, this is a very murky subject.

As for the Station Transformation project, the City Manager’s report states:

It is important to note that the projected 2018 net pressure or “gap” does not account for any additional service investments or priorities approved or identified by Council. For example, the $126 million forecasted pressure for TTC is based on maintaining current service levels. This excludes an additional $59 million identified by the TTC for initiatives such as Station Transformation which would be categorized as a new request and will be considered separately, subject to funding availability. [pp. 12-13]

[Note: The City’s total of $126 million does not match the total shown above of $150 million for reasons that are unclear. I have asked the City to reconcile this.]

One can well argue that the idea of getting rid of all Collectors is unworkable (even GO Transit, an all-Presto system, has station agents), and that the many duties the new Customer Service staff would take on are logically inconsistent (being available at a booth to answer questions and provide general directions, but also roaming the stations). Whatever the intent, the TTC has not yet produced a clear explanation of whether savings on Collectors were part of the justification for paying Presto to handle fares.

In any event, this $45 million is not included in the TTC base budget requirement for 2018 from the City’s point of view. If it is to be approved, that will be an additional expense on top of the other pressures.

Completely missing is any discussion of a Ridership Growth Strategy. Although the TTC tells everyone that ridership is down for various reasons, they also have stated that both the St. Clair and King streetcar lines are currently running over capacity during peak periods. This does not square with the claim that the TTC does not require more service, and suggests that one source of ridership “loss” is the inability of people to actually use the service.

An RGS report was supposed to come before the TTC Board earlier in 2017, but it was held back pending resolution of budget issues. Clearly this problem has not gone away, and yet if the report continues to be hidden, we will have no idea what might be possible and at what cost. Advocacy is not the TTC’s strong suit, and we have no idea of just how badly the system will be crammed thanks to the shortage of vehicles and the lack of sufficient revenue to operate them.

Not to be ignored is the status of Wheel-Trans where demand is growing very quickly thanks to improved eligibility requirements from the province. Freezing the Wheel-Trans subsidy (which provides almost all of its operating funding) will not allow growth, and the TTC could find itself in violation of accessibility targets if the City does not come up with the cash.

On the Capital side, the inability to add projects to the “approved” list could punch a big hole in plans for the Bloor-Danforth Subway’s revival. A collection of projects is to be presented to the Board for the renovation of Line 2 BD including:

  • A new signal system with Automatic Train Control
  • A new fleet replacing the T-1 trains which were built from 1995-2001
  • A new subway yard near Kipling Station

The ATC project is “funded” in the capital budget at an estimated cost of $431 million of which $131 million currently appears under post-2026 spending. Whether money for that is actually available in the City’s financial plans is unclear, but this will obviously be a case of “in for a penny, in for a pound”. The budgetary timing is odd because 1/3 of the total is post-2026 after the new system is supposed to be enabled and the old system decommissioned.

Neither the new fleet nor the new carhouse are funded projects in the budget. However, there is a timing issue for this project and a new fleet because the Scarborough Subway Extension will use ATC signalling, and this forces the issue because there is no point in retrofitting ATC gear to cars that will be at or near retirement age when the extension opens. There will be some cost offset in other budget lines including the SSE because storage for the new Line 2 fleet will be consolidated. (Greenwood’s layout is unsuited to the new unit trains now operating on Line 1 YUS, although it could be reconfigured and used for a future DRL with a track connection via Danforth.)

Another unfunded project is the purchase of an additional 60 new streetcars required to handle growing demand in the early 2020s, plus a further 15 (a placeholder number, probably) for the Waterfront transit project.

Putting any unfunded project “on hold” for 2018 might work as a way to avoid a capital planning crisis before the municipal election, but it will not do for the long term.

During the 2017 budget discussions, City Staff appealed to Council to set its service priorities as an integral part of building the budget:

Staff advised Council that it should first establish its collective vision for the City to determine the level and quality of services it wishes to deliver, determine and prioritize the City-building investments required to achieve this vision and consider the associated expenditures necessary to carry this out. In order to fund this expenditure level and any resultant gap, City Council would have to raise revenues and should look to all of its revenue-generating authorities and tools to do so, including property tax rate increases. This would be especially necessary if Council chose not to reduce its services and service levels. [p. 6]

For 2018, the City Manager warns:

Further expense reductions in 2018 will require strong action and a willingness to both reduce and sustain reductions in service levels if residential tax increases are to be kept at the rate of inflation. As recently made evident in the 2016 and 2017 Budget processes, there has been a reluctance by Council to embrace service level or service model changes; creating a mismatch between service aspirations and revenue generation. [p. 13]

There has been a fair amount of discussion by Council and input from the public (Long Term Financial Plan public consultation) that across the board budget targets do not reflect Council priorities, and therefore, should be differential. The current challenge to establish differential targets is the lack of stated relative Council priorities and implementation plans. A key issue is not that priorities are lacking but rather that there are many – many Council approved strategies, plans and service demand initiatives – some of which have been considered in relation to one another with their respective financial impacts within a priority-setting process that links service and policy planning to the City’s budget process and considered within the City’s financial capacity. [p. 14]

The priorities endorsed by Council for 2017 amounted to cherry picking a few very expensive capital projects, and demanding that staff find “efficiencies” with which to pay for any service improvements, indeed simply to keep the lights on. In the case of the TTC, a bit of last-minute hocus pocus avoided a large funding gap by boosting the assumed revenue from the land transfer tax. That particular hat does not have an endless supply of rabbits.

The overwhelming demand is to keep property taxes at the rate of inflation. That is an interesting concept as the City Manager explores in some detail both by reference to practices in other cities, and in the question of just what level of “inflation” should be used. Toronto has aimed at the CPI with a 2% increase in residential tax rates,but when the rebalancing effects for non-residential are factored in, the overall tax increase was only 1.39% for 2017. Moreover, there is a separate cost index measuring those items typically consumed by a municipal government, not by a private household. The municipal index has been running at over 3%, and it is no wonder that the City is unable to keep up with costs.

In addition to the “regular” property tax increases, there have been special levies to fund transit capital projects. The first, introduced during Mayor Ford’s term, is a 1.6% tax that will fund the City’s portion of the Scarborough Subway Extension. This tax will remain in place as long as needed to pay off whatever that share of the total cost is, eventually. The second, is a 0.5% tax building gradually to 2.5% to fund Mayor Tory’s capital projects. The situation is explained in the report:

Under current Council policy, debt servicing costs cannot exceed 15 percent of property tax revenues in any given year. In 2017, the 15% debt service ratio policy was relaxed to an average of 15% over the 10-year capital plan period as a result of the increased debt capacity made available to fund key capital priorities in 2017. $5.8 billion in new capital investments was made possible by adding $3.3 billion in increased debt capacity, based on the following actions:

  • $134 million debt room made available by better matching cashflow funding estimates to actual project timelines and activities
  • $2.2 billion in debt capacity was added in the latter 5 year years of the capital plan period by adding new projects that filled unoccupied debt room reflective of a 14.75% debt servicing ratio; and
  • $1 billion in additional debt borrowing capacity was made possible with Council’s approval of a 0.5% levy for each of 5 years as a contribution to a capital City Building Fund for transit and housing priorities.

The added debt capacity enabled the City to fund critical, unfunded capital priorities such as the added costs for the Gardiner Expressway Rehabilitation Project, the SmartTrack transit expansion project; Port Lands Flood Protection; the City’s required matching funds for TTC and non-TTC critical state of good repair projects eligible under the Public Transit Infrastructure Fund (PTIF); Toronto Public Library state of good repair and various transformation and modernization investments.

While this added debt capacity allowed the City to fund key projects included in the $33 billion of unfunded capital projects, doing so has maximized the City’s debt capacity based on its current, yet now relaxed, debt servicing policy. [p. 19]

In brief, if there is to be any new capital borrowing within the next decade for projects that are not already in the “funded” list, then these will require new revenue to service the debt. Even beyond 2026, the debt “mountain” will not recede quickly.

The only glimmer of hope within these recommendations is that:

Priority be placed on completing transit, transportation and social infrastructure projects funded through intergovernmental agreements in order to meet program conditions and deadlines to mitigate risk to the City, and

Should any funding become available, that capital funding priorities be limited to projects that address:

  • Critical State of Good Repair, including energy retrofits
  • AODA Compliance
  • Transformation, modernization and innovation projects with financial benefits
  • High-needs social infrastructure [p. 20]

Notably absent from that list is “rapid transit expansion”, or indeed transit expansion of any kind.

2018 will be a grim year for the City’s budget for all portfolios. Transit might get by, again, through some fiddling with figures, but that will not represent a real commitment to better transit, only to prevent its complete collapse while Councillors and the Mayor are trolling for votes.

14 thoughts on “Toronto’s 2018 Budget and Continuing Transit Austerity

  1. I can’t help but think that at least some of the ridership “loss” (and concomitant revenue loss) is due to the faults in the Presto card system. I review my Card Activity regularly, and so does my partner. Not a month goes by without at least one error in over/undercharging or totally absurd geolocation. I’ve not been charged when I should have been (e.g., for a return trip almost 2 hours after the outbound trip, at a location that could not be considered a legitimate transfer), I’ve been charged when I shouldn’t have been, at a legit xfer point, and I’ve been recorded as boarding a vehicle as much as 10 km away from my actual location. How can software validate against a legit-transfer database when the input is garbage? And there are still problems with both readers not working on surface vehicles. Drivers don’t enforce ticket/token/cash payment in those circumstances.

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  2. At what point would Vehicle Registration Tax or vehicle miles traveled surcharge be in the picture? City already has those tools and at the very least – it could offset Wheel Trans and TTC Op ex growth?

    Steve: But it would never be implemented. Tory is scared to death of a Doug Ford campaign and won’t give Ford anything that could be used to paint Tory as a tax-and-spender, particularly with the hated VRT which Rob Ford got rid of.

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  3. Part of the no tax increase hysteria I don’t understand at all.

    But part of it is probably due to the limitations of property tax. I have read several times in the media that rates in Toronto are lower than most cities in the GTHA. So the issue is the valuation of properties. Unlike income tax, property owners must pay tax on the unrealized gain in valuation leading to complaints that they are paying too much taxes. The real estate market is really too hot but many felt no choice to take on gargantuesque mortgage loans to buy a house instead of perhaps renting (not that it’s affordable in Toronto). So many feel they are squeeze by ever rising property values, stagnant income and cost of living generally that keeps going up.

    People don’t look at rates but instead at the amount they have to pay compared to a similar property in a nearby city as in: I pay 5000$ but my brother in law in Oshawa only pays 2500$ (Of course totally disregarding other factors). So I don’t see a way for politicians in Toronto to avoid a Doug Ford type campaign if not from Ford someone else will do it.

    Obvious solution is to switch to an income tax system, but one of the goals of the property tax system is to “force” owners who can’t afford to stay in a big house to downsize. So I don’t think anyone in power will want to change that (I don’t necessarily agree with this policy).

    So we are stuck in a vicious circle. Toronto has no choice it needs more revenue along with better funding from senior governments. But as long as it won’t use the tools it has it gives cover to politicians at Queen’s Park to refuse to improve funding.

    Steve: The situation with property tax is a bit more complex than what you have described, but I agree it does produce political pushback.

    In theory, if houses and condos all rise in value by similar amounts, then their tax would not change because Market Value Assessment is supposed to be revenue neutral. However, price increases are not uniform and some neighbourhoods see stronger growth than others with the result that their average “value” for tax purposes goes up more than the city as a whole. The result is that taxes in, say, North Toronto go up more than the average while in some places with little or no price growth could actually see a decrease.

    I don’t agree that a goal of the tax system is to force people to downsize, but it can be an unintended side effect. When MVA was brought in (by the Harris Tories), hyperinflation in property values was unknown.

    Finally, what has actually happened when one looks at the city’s revenue streams puts a lie to the idea of low tax increases notably separate levies to fund big capital projects, and the shift of utility fees (water, waste management) to separate billings that grow at the rate needed to fund these services.

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  4. Steve, I agree with you that the situation is more complex but didn’t want to expand too much on your platform. And those were the main points anyway. Of course any reform would have to take into consideration many points that you are probably thinking about. So am not suggesting it’s a quick fix far from it.

    As to the comment about forcing downsizing through property tax. My grandfather used to be a property evaluator for the city of Montreal and I took a class on charter law in college and both mentioned that this is a key component and was defended in court cases in Canada. But indeed Steve is right that there are other considerations at play about that.

    Still I don’t think that better funding from Queen’s Park and the Feds alone would be sufficient, the city needs to improve its revenue situation and that means using the taxes it currently controls. That being said Queen’s Park needs to do better as well.

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  5. Nothing like being a homeowner and spending a small fortune on retrofitting your basement into a home theatre with surround sound, buying new drapes and carpeting along with a new leather living room set and redoing your garage to fit your bigger vehicle while not repairing your leaking roof with missing shingles, not replacing the damaged eaves troughs – letting water run down the side of your house – and not protecting and reinforcing your foundation to prevent cracks or other damage. But as long as the folks driving by or coming in for only a quick visit think you live in a beautiful place that looks impressive – “My, what a ‘world class’ house!” – hey, what’s the diff?

    Between the TTC and Scarborough Subway Stupidity, the TCHC non-maintenance, the Billion-Dollar Gardiner Boondoggle and the continuous strong aversion to even *discussing* raising taxes above the rate of inflation “on principle” [sarcasm], how can the Mayor and Councillors tell all City Departments with a straight face, in effect, that “there is no more money in the budget” for regular programs and services in a city that is growing in population month-to-month?!? Or imply that the Province, somehow, “owes” the City the money that is needed to fix the problems? (Didn’t the Mayor say something about being ‘ tired of Queen’s Park treating him like a “little boy in short pants” ‘ when they quashed the idea of road tolls back in January this year?)

    When it comes to realistic budgeting, I don’t think he or many of his Council friends even know which leg to put in the pants first…. (But a lot of them need a good, swift kick in the rear!)

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  6. I keep thinking of how Vancouver analyzed their modal expenditures a couple of decades ago, and got a conclusion that the private cars were subsidized about 7 times more than transit, to a point of avoided costs etc., being about $2,700 per car each year. For Caronto, that’d be hmm, $2.7B a year, no inflation, and some discussion about how much was truly ‘given’ at the City level. And sure, the cars are very helpful sometimes, and we can’t all live in the transit=friendly and bikeable core. But it makes the fact of having a Vehicle Registration Tax capability, and the failure to use it really damning for the austerity agenda, along with the serious inflation in the housing, at what, 20%?, inflation that most of the City politicians are quite fine with really, as it’s more money, and not from the suburban voters.

    Having some restraint would be good, if it could be applied to stupid follies eg. that Suspect Subway Extension, where a decade ago, a shutdown of the SRT and a refit with new vehicles was about a ninth of what this SSE is now supposed to be costing, We don’t want to squeeze the billions however, another example of false conservatism, and carservativism too.

    For details on the avoided costs etc., vtpi.org is one site and Perverse Cities by Pamela Blais should be looked at. And how much can we do on-surface to help be economic?

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  7. Given the constraints on the TTCs capacity to maintain and grow services and complete essential maintenance, does your crystal ball suggest Mr. Byford may find a less politicized transit system to head? Can’t imagine a good CEO wishes to lead an agency which is restricted from providing good or improving service.

    Steve: That’s hard to say. I believe his contract was renewed for another five years, which is some sign of confidence, or maybe if I were cynical, desperation, that doing anything to drive him away would not look good for the Mayor. That said, the next few years will be crucial. A related issue, however, will be how hard he fights for the resources to actually run the TTC properly.

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  8. Not to overdo the Chicken Little thing, but this austerity budget doesn’t have much allowance for a serious drop in land transfer tax revenue, does it? If our real estate bubble does pop, we have to hope it doesn’t do so extravagantly.

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  9. The decisions made at the TTC are too politicized. No company in the world will give children free service like Mr. Tory does. If children paid for service, there will be a little bit of money to spend on priorities. Every few years, some politician will come out and promise a fare freeze. Those are great sound bites, but ultimately transit cost a lot of money. It has to come from somewhere.

    City council could not balance a budget using GAAP standards. We are in the middle of a real estate boom. What happens if the real estate market stop rising? Will Toronto have deficits larger than Chicago? Mr. Tory needs to find a new way to make money. Let’s not forget that Toronto has legislative power for a vehicle registration tax. We have the blessings from Ms. Wynne for a gaming facility in Toronto, but the city chose otherwise.

    If the TTC is a private entity, it will not have children travelling for free. The Yonge Line would have surge pricing implemented long ago and the proceeds used to build a parallel line somewhere. Instead we get politicized decisions. I want business decisions. Want to see what a public entity does to a money making enterprise, look no further than OLG. OLG casinos have a license to print money, but management squander most of it away. Now, they are sold to Gateway Casinos and Shoreline Casinos. What do the new owners do, they invest money to make more money. Politicians cannot even run a lemonade stand, let alone a world class transit system.

    The TTC has a captive audience, but they cannot leverage that. If Loblaws have the same amount of foot traffic like Finch, they would put a PC Financial booth, a Shoppers Drug Mart and a quick service restaurant. It is so sad that we have no retail in most stations. Even at a mobility hub like Kennedy Station, we have no 7 Eleven, dry cleaning, banking and Starbucks. When people buy $7 coffees, this is how a station gets improved. 10000 sq ft of retail space at $400 per sq ft per month is $4 million extra per month.

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  10. It seems the TTC is following the example of London in eliminating ticket offices/collectors booths – and transitioning staff to become ‘customer service agents’. Good.

    In my experience, London Underground staff are now much more available and visible – hanging around the barriers and the ticket machines ready to help, instead of hidden away inside the ticket office. As in London, I’m assuming the TTC will have a mini booth for the collectors to sit down when it’s quiet/or a place of safety in emergency.

    If it saves money, even better. Just ensure (as in London) that stations are staffed – first train to last.

    Steve: This is a great idea, but there are problems with implementation. First, the TTC claims that the CSAs would have many functions including wandering around stations to check on their general status. If they do this then (a) hiding is easy and (b) they will not be at the mini ticket booth.

    Also, many stations are not the most pleasant places to sit around outside a climate controlled booth for eight hours. Forcing staff to do this is a recipe for a very unpopular job position and lousy customer service.

    Finally, past discussions of a new fare system have included an implicit assumption of staff savings. If the collectors become CSAs, there will be considerably less, if any, staff saving. The City Manager’s report treats the CSAs as a net new function at the TTC, and does not include their cost in the preliminary budget.

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  11. ‘debt servicing costs cannot exceed 15 percent of property tax revenues in any given year’.

    Does this quote mean that if interest rates rise significantly, it could upset the whole capital budget for Toronto (along with many other mortgages)?

    Steve: Yes, sort of. The effect would take some time to work through future plans because of varying maturities of existing debt. The City finance people take possible future interest rate hikes into account when planning their long-range capital financing, and so this has (barring a major economic shock and a big jump in rates) already been factored in.

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  12. Concerning Presto, a Mississauga Presto machine on a 109 bus on May 10 had a date Feb 14, 2006 @ 7:22. The subsequent transfer obviously failed, and there was no trace of the trip in my Presto log.

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  13. Gordon Keith reports, “Concerning Presto, a Mississauga Presto machine on a 109 bus on May 10 had a date Feb 14, 2006 @ 7:22. The subsequent transfer obviously failed, and there was no trace of the trip in my Presto log.”

    I read the following interesting bits from the “Presto Card” page on Wikipedia:

    “Presto card readers were trialled from June 25, 2007 to September 30, 2008. … Thales Group and Accenture were awarded the contract to supply this system in October 2009. Implementation is the responsibility of Metrolinx, of which Presto became an operating division in 2011.”

    Then, immediately after:

    ‘The Presto project was strongly criticized by the Auditor General of Ontario in 2012 for “roll-out glitches, cost escalations and untendered contract extensions.”.[2] The ongoing Presto rollout on the TTC’s bus, subway and streetcar network have been marred with abnormally high failure rates of the readers themselves[3] and cost overruns.[4] ‘ (I’m not including the references from the page cited here, BTW).

    Computer designer Adam Osborne – who, I will acknowledge, wasn’t a completely successful businessman in the 1980s, to be sure – said, “People think computers will keep them from making mistakes. They’re wrong. With computers you make mistakes faster.” This seems to be the mantra when it comes to transit planning in Toronto at the provincial and local levels.

    Once again the Government of Ontario shows the “brilliance” [sarcasm] of yet another made-from-scratch system for which they have become infamous over the decades. Remember the Scarborough RT? The Unisys ICON computers for elementary and high schools? The Electronic Health Records system (“E-Health”)? Other “systems” were in place at the time but it was decided that an out-of-the-box solution was too generic to unpack and use. Meanwhile, none of these in-house ideas appear to have been Beta-tested sufficiently to verify the proposed results, meaning subsequent just-plain-bad operations, along with no seemingly ready method to supply “patch” fixes and resolve the inevitable problems.

    London developed their Oyster Card. Hong Kong has an Octopus Card. Yes, there were issues but for the most part they have been resolved; meanwhile, further developments, including the eventual move to using credit or other contactless cards to effect payment have been moving forward on these transit systems. My point is that, even with Presto being developed in-house, there are still anecdotal reports of missing payments, double payments along with malfunctioning or completely broken machines on vehicles and it is only a matter of time before many “someones” who wanted to “tap on” or “tap off” but couldn’t are going to be charged improper fares or charged by the transit officers and ordered to pay a $345 fine. Which is *not* fine!

    City Councillors can’t seem to figure out how important the provision of sufficient and timely transit is to this city’s financial functioning, including for car drivers coming in from the suburbs (imagine if all the transit riders were in automobiles!). The Mayor, Councillors and the TTC are to blame by not allowing a 2-hour travel window for one fare, which would simplify the Presto issue too; it’s fine to offer free fares to kids – because that sells politically – without stating the economic impact to the system and yet TTC brass know to the penny how much they will lose if a 2-hour fare is implemented, so they scrapped that issue with no further discussion. Scarborough gets its stubway while the Relief line still languishes and York Region argues they should be allowed access through a subway link at Finch onto an already overfilled Yonge line just like York Region West is getting access to the Spadina Extension later this year. (Thankfully the Yonge “East” project is being pushed back for now!)

    It makes me think of those Choose Your Own Adventure(TM) books where, at the bottom of the page the reader makes a choice and turns to a particular page to continue the story. In Ontario’s and Toronto’s transit cases, most every single choice has been the wrong one. So while the Province, the Mayor and several Councillors (and previous Premiers, Mayors and Councillors too) seem to believe that there are no real consequences and it’s just a simple matter of “pretend”, the actual reader – or, in the case of transit, the *rider* – ends up trapped at the bottom of a dark well with no chance of escape!

    Steve: While you’re blaming the politicians, don’t forget the small army of consultants, bureaucrats and hangers-on who made a fortune reinventing technology for Ontario. The easiest pitch always seemed to be that (insert technology here) will put Ontario to the forefront, lead industrial growth, bring new jobs and put a chicken in every pot. Total BS.

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  14. Gordon Keith says ‘debt servicing costs cannot exceed 15 percent of property tax revenues in any given year’. Does this quote mean that if interest rates rise significantly, it could upset the whole capital budget for Toronto (along with many other mortgages)?

    Given that the greater part of the financial burden of financing these infrastructure projects will fall on the provincial government, it would be reasonable to expand your question to include the province. Given that Ontario is one of the world’s most indebted sub-sovereign borrowers, it is a note worthy possibility that if global discount rates regress towards their historic average the province will likely be faced with funding challenges.

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